Upaul Majumdar, the Head of Practice-Tourism for South Asia at Dolma Consulting UK, has over 30 years of experience in the hospitality industry. His role at Dolma Consulting focuses on rejuvenating and developing tourism across South Asian countries including Nepal, India, Bhutan and Bangladesh. Upaul began his career with Oberoi Hotels and later transitioned into the airline industry with Jet Airways. His stint in Nepal started in 2012 as the CEO of Hotel Annapurna. Following the 2015 earthquakes, he joined Intercontinental Hotel Group (IHG) as General Manager of Soaltee Crowne Plaza. Post-pandemic, Upaul joined Dolma Consulting UK, where he has been working in setting up hotels such as Dusit Princess and Varnabas Museum Hotel. In a conversation with Madan Lamsal of New Business Age, Majumdar shared Dolma’s tourism plans in Nepal, and the prospects and challenges of the tourism industry. Excerpts:

What exactly is your responsibility at Dolma?

My job is to work on projects that bring tourists to Nepal and enhance the country's tourism sector. Unfortunately, because Dolma also operates as a fund, we rely on fundraising and have different partners who contribute to the fund. One of them said that we couldn't invest in hotels, considering hotels too risky, especially in 2021, with Covid-19 still ongoing. The impact continued into 2022, and it was only in 2023 that we started seeing a recovery. By 2024, the hospitality industry experienced a brilliant boom. I hope that restriction will be revoked so Dolma can invest in hotels which was the original objective of why I came on board.

We are doing a lot of work in tourism. We have produced numerous reports for various multinational and multilateral agencies that fund tourism. Likewise, we have done some work in green tourism funding for MSMEs and SMEs as well as in advocacy to ensure the rules are favourable for foreign direct investment (FDI) in the tourism sector. Also, we have worked on sustainability, bringing those standards into the industry and addressing all aspects of tourism.

While my background is in the five-star deluxe space, I now focus on homestays, smaller hotels and rural tourism. I am not just looking for investment opportunities; I am also focused on development -- bringing in competency, introducing technology and helping people understand what the world needs and how to achieve those goals.

We are working on a large project to develop the Karnali River and are doing a fundraiser on a PPP (public-private partnership) basis. This project is a major focus for tourism in the Karnali region.

Could you please share about the tourism plan of Dolma in the Karnali region?

We are trying to raise Rs 6.5 billion for the Karnali River Tourism Development Fund. Through this fund, we will work with river communities, many of whom are migrating, to set up an ecological river tourism training institute to build the capacity of the local people. We are also looking at introducing new activities. For example, I recently learned about angling which is very popular in Europe and the United States. Angling involves spending a day fishing, and people pay as much as they would for a round of golf -- around $200-250 per day. Karnali is famous for the Mahseer which thrives in fast-flowing waters. It is a game fish; you catch it, weigh it and then release it.

We are exploring a lot of new products like this in tourism. Besides that, I am also working with several property owners, helping them get their projects right and bringing international brands into Nepal. That is an area where Nepal currently lacks because tourism today is global and experiential. The challenge is defining and marketing these experiences to the world.

There has been a surge in tourism arrivals and an increase in the number of hotels in Kathmandu. Will this growth continue, or is Nepal likely to see a decline?

Tourism has seen significant growth in recent years. For example, 2024 has been fairly good in terms of tourism numbers even though most other industries in Nepal are not doing too well. Tourism is the silver lining in these dark clouds. There has been a huge surge in tourism activities, and this is happening despite limited promotional efforts. For instance, the Nepal Tourism Board (NTB) has been without leadership since January. Even before that, there were some comments from the Office of the Auditor General. The NTB is not doing any international promotion. It is quite surprising that we are still seeing so many tourists. But I believe the more you promote, the more you attract, and the more you sell.

Tourism in Nepal has been driven primarily by private entrepreneurship. Associations like Nepal Association of Tour and Travel Agents (NATTA), the Pacific Asia Travel Association (PATA) and Hotel Association of Nepal (HAN) have been doing an amazing job with tourism promotions.

These are private associations, funded by private money, and they have been actively promoting tourism. The credit for this surge in tourism numbers goes largely to the entrepreneurial spirit of these people.

There was also a pent-up demand from the Covid-19 period as people couldn't travel for about two to two and a half years. Also, the work-life balance feature has changed, with companies now more open to allowing employees to work from home for certain days of the week. Companies are now okay with people logging in remotely and working from different locations. This flexibility has led to an increase in travel, as people are taking advantage of the opportunity to go out more often. Another outcome of the pandemic was the strengthening of family bonds, as people were forced to stay at home. Today, people want to continue that tradition, so they are more likely to go on holidays with their families or close friends. We are seeing more groups taking short holidays which was not as common before. Another significant change that occurred during Covid-19 was that many families lost a key member, or people lost friends and loved ones. This created a realisation that life is short, and people are now more inclined to do things on their bucket list, reduce stress and take life less seriously. As a result, people are willing to spend some of their disposable income on travel as a form of relaxation. These are some of the current travel trends.

If NTB had strong leadership, do you think the situation would have been significantly better?

Yes, absolutely. Nepal is missing out because it does not have any other organization dedicated to tourism promotion. For instance, if we compare Nepal to Bangladesh or India, they have state tourism promotion councils and several other bodies, in addition to private sector organizations. However, in Nepal, we are relying on a kind of natural growth without the structured promotion and support that other countries have in place.

Currently, Nepal lacks a functional National Tourism Organization (NTO). Much of tourism marketing occurs in the digital space these days, and large companies are engaging with their customers online. However, tourism promotion is largely handled on an individual basis in Nepal, which comes with many limitations. For instance, many of our tourism associations lack a comprehensive digital promotion plan and strategy. While funding is not an issue here, effective digital marketing still needs to be implemented. Countries that have recently emerged on the international tourism map, such as those in East Asia, have successfully used digital marketing to boost their tourism industries. Places like Azerbaijan, which were previously unknown, have become popular destinations through effective digital marketing. These countries invest in top-quality international digital marketers to achieve significant results.

If you look at tourism arrivals, the top four countries are India, China, Germany (or the United Kingdom), and Sri Lanka. The availability of specific types of cuisine in Kathmandu is crucial for these visitors. For example, Indian food is widely available in Indian restaurants and five-star hotels. However, authentic Chinese food may not be readily found outside five-star hotels. English food, on the other hand, might be less common and harder to come by in Kathmandu. We need to focus on more than just discussing infrastructure if we are to attract high-end tourists.

Could there be a tourism boom in Nepal despite connectivity constraints, considering that two newly opened international airports in Bhairahawa and Pokhara are not yet fully functional?

This trend is likely to continue. The tourism sector typically experiences a boom that lasts about four to five years once it starts picking up. We are currently at the beginning of this boom. All global factors and metrics indicate that we are entering a period of growth.

A lot of tourists are coming by road. Nowadays, you frequently see Indian number plates on vehicles in Nepal. Chinese number plates are also becoming noticeable in Kathmandu. If you look at hotels in Nepal-India border areas like Butwal, Bhairahawa, Birgunj and Nepalgunj, you will be surprised to find that many wealthy families prefer to drive their own cars. It is very easy for Indians to drive into Nepal, and they often come for weekend getaways to relax with their families.

When people stay in five-star hotels, especially in border towns, many of these hotels also have casinos. Men might go for drinks and then visit the casino, while children enjoy the swimming pool and women go shopping. Also, there are many places of interest, including small temples, hills, and local attractions. Even in the plains, there are hill stations and various activities to enjoy. This variety of attractions is drawing visitors to towns like Biratnagar, Birgunj and Nepalgunj. Nepalgunj now has eight hotels with casinos. All of which are doing well. Most of their guests come by road. Unfortunately, we are not accurately counting the number of tourists coming by road. If we did, we would see that the number is quite significant.

There has been a lot of discussion about Bhairahawa airport. When it first opened, it was handling several international flights. However, the government intervened, requiring Nepal Airlines and Himalaya Airlines to handle some flights. This led to a misconception that international flights couldn’t operate there. In reality, international flights were successfully taking off and landing without issues. It is crucial to get the correct message out. We need to follow up with the airlines that previously operated flights from Bhairahawa and understand their reasons for withdrawing those routes. It is not just about passenger numbers; Kathmandu’s airport is full, and a significant number of passengers come from the plains. Some airlines have mentioned problems like inadequate immigration facilities or subpar equipment at the new airport. The government’s tourism body should engage with all stakeholders to identify their needs and address these issues. Talking about Pokhara airport, it is a beautiful facility with no border issues. Still, it is not seeing international flights. The private sector also needs to step up and speak with a unified voice.

We are currently having debates about our aviation bodies and related issues. We have many challenges, but it is crucial how we project and address them. Demonstrating a serious commitment to resolving these issues can make a significant difference. If these airports become fully functional, it will have a substantial impact. I recently met a tourism entrepreneur who is also an NRN (Non-Resident Nepali). He shared an interesting fact: the Embassy of Nepal in Bangkok issues approximately 800 to 900 visas per week. This indicates strong interest from Thai people wanting to visit Lumbini. If we had a direct flight from Bangkok to Bhairahawa, it would likely be full, given the demand for travel to Lumbini.

What are the benefits of domestic hotels partnering with international chains? How can such deals enhance visibility, credibility, and operational standards for hotels?

The current demand is for safe and quality accommodation. By "safe," I do not just mean safety and security. Safety also encompasses health and hygiene. Travellers today are concerned about falling ill, and they are willing to pay for high-quality accommodation that meets these standards. The trend is clearly moving towards branded properties. I have experience working with both branded and non-branded properties in Nepal. I found both to be successful. But there is a fundamental difference between them. When Covid-19 started, international brands were quick to implement global protocols and standards. This rapid response provided guests with the assurance that everything was up to standard. Branded properties offer a level of confidence in their adherence to these global standards which is crucial for today’s travellers.

Hotels need international tie-ups or adherence to international standards and protocols to build trust and credibility. For example, when I worked with IHG, their Covid-19 protocols were developed by a major US hospital chain, not IHG itself. I even obtained permission from IHG to share these protocols with all hotels in Nepal at that time. Having international standards and certifications provides a level of assurance to guests which is naturally integrated when working with a recognised brand.

Another critical aspect is marketing and reaching your target market. Four branded properties opened in Kathmandu in 2024: Holiday Inn Express in Tangal, Lemon Tree Premier in Budhanilkantha, Hilton at Naxal in the heart of Kathmandu, and Holiday Inn Resort in Budhanilkantha. Kathmandu's domestic tourism is limited because many locals have their own homes and do not stay in hotels. Most hotel guests in Kathmandu are international tourists. Therefore, hotels in Kathmandu must reach potential guests abroad. Branded hotels have significant marketing advantages: they have robust loyalty programmes, run global promotions and leverage international sales channels. They attract business through their global presence and marketing power. Nepal has many excellent tourism entrepreneurs who run top-notch hotels. However, partnering with an international brand or franchisor could provide access to broader markets and maintain high-quality standards. Brand affiliations also ensure periodic audits which help ensure that staff adhere to global standards.

Do you think Kathmandu is reaching a saturation point for hotel construction?

Is the branded quality space, where customers are willing to spend more than $100 per night, saturated? There is still a lot of demand. Today, properties in Kathmandu often do not sell below $160-180 per night. For example, the introductory rate of the recently launched Hilton is $180. Considering that July and August are typically low months for business, their pricing strategy suggests that rates could exceed $200 in the peak season. Since they conduct extensive research and rely on data when setting these rates, this indicates that there is significant demand at this price point.

Likewise, Marriott's entry into the market was eye-opening. Despite lacking certain features like a lawn or a traditional sense of arrival typical of five-star hotels, it has been highly successful. This shows the importance of quality standards, such as new, larger rooms. Nepal faced energy shortages until 2016 which led to smaller building sizes to reduce heating costs. However, with the advent of hydropower, larger spaces can now be built. Branded properties often use energy-saving devices, which means their operational costs are generally lower compared to non-branded properties.

Is Nepal’s tourism industry offering the right tourist packages? What improvements are needed to sustain tourism in the long run?

The product exists, but we are not marketing it effectively. For example, Soaltee started a hotel in Nepalgunj. I used to visit Nepalgunj often, helping them with various initiatives. I asked them what else can you do in Nepalgunj besides the casino. There is a blackbuck sanctuary located about a 45-minute drive from Nepalgunj. Unfortunately, not many people know about it. Similarly, there is a canal linkage with some crocodile farming areas nearby. These are also relatively unknown. There are many local attractions, but we have not packaged or marketed them properly.

Hotels in Kathmandu are not offering staycation packages despite their popularity in places like India, where demand is high, or in Bangladesh and Western countries. Staycation packages allow people to stay at a hotel, enjoy its amenities like food, drinks, entertainment facilities, swimming pools and spas, and then return home by Sunday night or Monday morning. It is a great way to enjoy a mini-vacation without leaving the city. Such ideas should be more widely adopted here. There needs to be more knowledge and education among tourism entrepreneurs to understand that what they are selling is a perishable product. If a hotel has four empty rooms today, they can never sell them again -- once the time is gone, it is gone.

The mayor of Nepalgunj once decided to turn the city into a casino hub. He went to every hotel owner and encouraged them to upgrade their properties to meet four-star standards to include a casino. He also worked with authorities to ensure that visitors from the border were not hassled, knowing they were coming for the casinos. This kind of local-level facilitation is crucial. The same principle applies to hotels in Kathmandu today. If you visit any five-star hotel and ask about city sightseeing, they might just give you a map and refer you to a couple of travel agents. But the hotels themselves are not organising anything. If a guest asks where to buy local handicrafts, they might be directed to Thamel, even though the same items are available at half the price in small towns like Bungmati. All these things could be included in well-thought-out packages.

If new investors are considering opening a hotel in Nepal, what challenges will they face?

Land costs in Nepal are extremely high. Beyond that, obtaining the necessary permissions is a complex process. There is no single window clearance system, and even within the Kathmandu Valley, Kathmandu and Lalitpur have varying rules and regulations for buildings and hotels. For example, the rules differ regarding building height and the Floor Area Ratio (FAR) allowed.

In most countries, high-rise buildings are required to have a six-metre setback from the road to allow access for fire trucks that can reach up to 25-30 stories. In Nepal, we have adopted the same setback rule, requiring buildings to leave a six-metre gap. However, the irony is that we do not have any fire trucks capable of fighting fires even at a 10-story level.

I have worked extensively with hotel design and branding, and I have observed that international hotel chains are very particular about fire and life safety. They ensure that their hotels have 100% of the necessary resources to combat a fire internally without relying on external help. Given this self-sufficiency in fire safety, we could consider offering these hotels some flexibility in their building designs. Allowing them to build better structures rather than leaving large, unnecessary empty spaces would be more practical, especially since these setbacks often get covered up later on.

Another step we need to take is to make low-cost funds available through Foreign Direct Investment (FDI). Currently, there is significant interest in investing in Nepal’s tourism sector, with plenty of funds available. However, the rules surrounding FDI are extremely tight, making the process of obtaining clearances a nightmare. Even after the funds arrive, getting them released by the banks is another difficult challenge. Nepal lacks sufficient domestic funds to develop high-quality infrastructure. International investors see potential in Nepal’s tourism industry, considering it a low-risk investment because hotels generate foreign exchange. With hotel revenue tied to the dollar, even if the investment comes in Nepali rupee, it is still hedged against the dollar. Therefore, we should simplify the rules for FDI as long as Know Your Customer (KYC) protocols are in place to prevent the influx of slush or laundered money. After ensuring strong KYC compliance, investment should be allowed with ease.

Moreover, taking an international loan offers additional benefits. For instance, if you take a loan from a local bank and the economy improves, interest rates might rise, increasing your costs. However, with international loans, the interest rate is fixed which means your returns and projections remain stable. This removes the element of speculation. Currently, a lot of hotel investments in Nepal are speculative, and while there are success stories, there are even more instances of failure. Often, people start building hotels only to realise midway that they lack the necessary funds to complete the project.

Nepal currently faces a problem of youth exodus abroad. How is the hospitality sector dealing with this issue?

It is very difficult to find staff in Nepal. As a result, employers have started realising the importance of keeping their employees happy and providing them with good working conditions. While there are plenty of hotel management training companies in Nepal, most of them train people for jobs abroad. If you look at any hotel management college, very few focus on securing jobs within Nepal. Instead, they emphasise sending graduates for training in places like Dubai or China. This creates a scarcity of manpower in the local industry.

International hotel chains, however, are better equipped to handle this issue because they have strong learning and development (L&D) programmes. These programmes are designed to manage staff turnover effectively. Every department within these hotels has a dedicated trainer and a well-structured training programme, allowing them to adapt to staffing challenges more efficiently.

To address shortage of staff, businesses need to offer higher wages. Currently, salaries in Nepal are relatively low, but as demand for labour increases, wages will need to rise accordingly. Labour costs are directly linked to demand, and if we expect people to work more, we must be prepared to pay them more. At present, our salaries are far too low to meet the growing demands of the industry.

What role does sustainable tourism play in your vision for the future? How can hotels and tourism businesses integrate sustainability into their operations?

Nepal’s tourism is predominantly outdoor, with 95% of activities taking place in nature. In contrast, places like Dubai have managed to attract huge numbers of tourists with 90% of their attractions being indoors, apart from the desert safaris. This difference highlights the need for Nepal to adopt strong sustainable practices and enforce environmental protection laws. If we are to preserve our natural attractions, which are our primary offerings to the world, we must ensure that they are not depleted by over-tourism. The idea of supporting two million, three million, or even five million tourists sounds promising. It, however, raises concerns about the potential negative impact on our environment.

Reflecting on India’s experience, I recall the hill stations like Nainital and Mussoorie, which were once pristine getaways during Delhi’s hot summers. Over the years, however these places have suffered from haphazard construction, deforestation, plastic waste, landslides and a general deterioration of the environment. Mussoorie, for example, became so overdeveloped that today, no new buildings are allowed; only existing ones can be refurbished. These lessons from India emphasise the importance of implementing and strictly enforcing sustainable practices in Nepal to avoid a similar fate. With the upcoming operations of the Bhairahawa and Pokhara airports, Nepal could see three times the number of tourist arrivals which could overwhelm the country if not managed properly.

There is also a significant lack of awareness regarding the consequences of our actions on the environment. For instance, without strict laws and enforcement, waste is often dumped untreated into water systems, leading to the pollution of rivers like the Bagmati. Such practices must change, and there needs to be a strong commitment to environmental responsibility.

We must focus on attracting quality tourists who value and respect the environment. Domestic tourism also plays a vital role in supporting homestays and small hotels. Bhutan has maintained strict rules to avoid cheap tourism, focusing instead on attracting tourists who contribute to the preservation of their culture and environment. Bhutan’s approach is something Nepal could learn from. While we can support domestic and local tourism, we should be cautious about encouraging mass tourism that could harm our natural resources. We should aim to bring in tourists who are willing to invest in a quality experience and help sustain the environment and local communities.

(The interview was originally publihsed on the September, 2024 issue of the New Business Age Magazine.)